Correlation Between Land and MFC Strategic

Can any of the company-specific risk be diversified away by investing in both Land and MFC Strategic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Land and MFC Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Land and Houses and MFC Strategic Storage, you can compare the effects of market volatilities on Land and MFC Strategic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Land with a short position of MFC Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and MFC Strategic.

Diversification Opportunities for Land and MFC Strategic

-0.1

Correlation Coefficient

Land  MFC Strategic

Good diversification

The 3 months correlation between Land and MFC is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and MFC Strategic Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Strategic Storage and Land is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Land and Houses are associated (or correlated) with MFC Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Strategic Storage has no effect on the direction of Land i.e., Land and MFC Strategic go up and down completely randomly.

Pair Corralation between Land and MFC Strategic

Assuming the 90 days trading horizon Land and Houses is expected to under-perform the MFC Strategic. But the stock apears to be less risky and, when comparing its historical volatility, Land and Houses is 34.24 times less risky than MFC Strategic. The stock trades about -0.12 of its potential returns per unit of risk. The MFC Strategic Storage is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  769.00  in MFC Strategic Storage on September 5, 2024 and sell it today you would lose (24.00) from holding MFC Strategic Storage or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.48%
Values	Daily Returns

Land and Houses  vs.  MFC Strategic Storage

Land and Houses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

MFC Strategic Storage

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Strategic Storage are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MFC Strategic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Land and MFC Strategic

The main advantage of trading using opposite Land and MFC Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Land position performs unexpectedly, MFC Strategic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MFC Strategic will offset losses from the drop in MFC Strategic's long position.

The idea behind Land and Houses and MFC Strategic Storage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.